Case Law Details
Falgun N. Sheth Vs ITO (ITAT Rajkot)
The plain reading of the provision of law as provided in section 206C(1A) of the Act would bring out there is no time line prescribed for filing of such declaration. Nothing to this effect has been brought to our notice by the ld. DR; nor is it his contention that these declarations have been filed beyond the time prescribed by law. Having said so, we find that the assessee has given a reasonable cause for delay in filing these declaration, pointing out that till the order passed by the Special Bench of the ITAT in case of Bharti Auto in 2013, the view of the ITAT in various decisions was that it is only in respect of the scrap generated by the assessee during their manufacturing activities, which are sold to other parties, on which TCS is required to be collected; that not all scrap would qualify for TCS but only scrap generated by the assessee in the manufacturing activities would qualify so. Therefore, the assessee harboured a bona fide belief that he was not required to collect TCS on the scrap sold by it, since it was not generated during the course of any manufacturing activities carried out by it but was sold as a trader of The assessee has contented that it was only subsequent to the decision of the Special Bench that the position of law in this regard became clear that all sorts of scrap qualified for TCS, and therefore, on becoming aware of the decision, the assessee resorted to the alternative claim for claiming exemption from TCS by collecting declaration from the buyers that the scrap purchased by them was for manufacturing purposes, as per section 206C( 1A) of the Act. No infirmity has been pointed out by the Revenue in respect of the explanation of the assessee.
Clearly, till the passing of the order holding the assessee to be an assessee in default in the present case u/s 206C(6)/(7), in the year 2012, the assessees belief that it was entitled to exemption from TCS on scrap sold, was a valid belief in view of the various decisions of the ITAT on the definition of ‘scrap’ including only scrap as generated by assesses during manufacturing process and not that dealt with as trader of scrap. During the course of appellate proceedings before the ld. CIT(A), the assessee became aware of the decision of Special Bench of the ITAT holding otherwise. The order of the ld. CIT(A) reveals that the matter itself came up for hearing before him in the year 2019. By then the assessee had collected various declarations from the buyers u/s 206C(1A) for the purposes of claiming exemption from TCS ,and filed it to the concerned TDS officers which was acknowledged as receipt by them also.
In view of the above facts that no limitation is prescribed in the Act for filing of declaration as required under section 206C(1A) of the Act, and the assessee having filed delayed declaration under a bona fide belief, we are not in agreement with the ld. CIT(A) that these declarations could not have been entertained by the ld. CIT(A). As noted above even the Revenue has considerably delayed action on its end. The assessee alone therefore cannot be held accountable and made to suffer for the delay at its end in filing the requisite declarations for claiming exemption from TCS.
FULL TEXT OF THE ORDER OF ITAT RAJKOT
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